Samsung sees TV market recovery, boosted by new models

BERLIN | By Harro Ten Wolde

Models pose with Samsung Electronics' Ultra HD LCD televisions during World IT show 2013 at the Coex convention centre in Seoul May 22, 2013.

Reuters/Kim Hong-Ji

BERLIN Samsung Electronics Co, the world's largest maker of televisions, expects a recovery in the TV market in the second half of this year, helped by an improving U.S. economy and the launch of new high-end sets.

With LCD TV prices falling by 15 percent on average every year, mainstream manufacturers are adding new features and going upmarket with bigger screens that boast four times better resolution than lower-priced LCD models from Chinese rivals.

"The first half of the year was quite tough for the television market. Now that the U.S. economy is recovering, we foresee that the second half will be quite positive or will recover," Kim Hyun-suk, head of Samsung's TV business, told Reuters in an interview.

"We will have new technology coming into the market such as UHD (Ultra High-Definition) televisions."

Speaking on the sidelines of IFA, Europe's largest consumer electronics trade show, Kim said Samsung's focus will remain on the premium segment, offering increased model ranges and competitive prices.

Samsung is feeling pressure from Chinese manufacturers such as TCL Corp, the world's fifth largest TV maker.

The China market now accounts for 27 percent of global demand on a unit basis, bigger than Europe and North America.

BETTING BIG ON OLED, UHD

The South Korean firm has staked its display future on OLED - organic light emitting diode - technology and its success with smaller screens has boosted its smartphone market share and earnings.

As part of another push to expand its premium segment line-up, Samsung took the wraps off two curved OLED TV models with UHD quality ahead of rivals at IFA. But the big screens are likely to take it on a much slower road to profit.

Samsung, which launched its first OLED TV in June, slashed the 55-inch ultra-thin curved screen model by $4,000 to 9.9 million won ($9,000) last month, and cut the same-size ultra high-definition (UHD) models by $1,500 to $4,000.

OLED is widely believed to offer the potential for better quality than standard liquid crystal displays, with crisper picture resolution, faster response times and high-contrast images, but price tags in the range of $9,000 remain a hurdle.

Samsung and rivals such as South Korea's LG Electronics Inc and Japan's Sony Corp are also expanding into the UHD market, which offers four times better resolution that conventional LCD models and is fast gaining traction in the large-sized over 60-inch markets.

Daiwa Capital Markets forecast UHD TV sales of around 1 million sets this year, or just 0.5 percent of LCD TV demand. It expects UHD TV sales to account for around 5 percent of LCD TV shipments over the next three to four years.

OLED TVs are likely to show a much slower growth due to manufacturing challenges. Shipments are seen at just a few thousand this year but will grow to 1.6 million units in 2015 and 9.0 million in 2017, according to Daiwa.

Global TV majors are seeking ways to improve thin margins, for instance by outsourcing manufacturing or splitting the business via a venture with partners.

Kim said Samsung had no such plans.

"Overall the TV industry is looking at how to improve margins. We are still profitable," the executive said.

"We did review the possibility of outsourcing but ... we want to be close to our markets in terms of production. So for the time being we have no outsourcing plans."

(Additional reporting by Miyoung Kim in SEOUL; Editing by John Stonestreet)